Consumer Behaviour Dell

The purpose of this report is to research and evaluate the UK consumer in order to launch an innovative ‘Kinotop’ laptop computer which would expand Dell’s target B2C group and also market share in the UK and establish ‘Dell Kinotop’ as a new ‘must have’ item amongst professionals between the ages of 35-50 which self recharges by kinetic energy.

The target audience is classified as ‘power energy users’ and are mostly involved in engineering and graphic design orientated professions rather than ‘mainstream business users’. ‘The more you use it – the more you save. ’ Worldwide retail market for laptops remains extremely competitive as fast product development and very intense competition at all levels continues to broaden costumers’ choice and drive prices down. With London Stock Exchange being one of the oldest and fourth largest worlds, the UK market is not an exception.

The UK is a leading trading power and financial centre and one of the quintets of trillion dollar economies of Western Europe (CIA). Latest census states that total UK population is estimated to be 62. 2 million people, with 67. 1 % of population falling between the age of 15-64 and median age 38. 6 years for males and 40. 9 years for females. The majority of British population falls into Dell ‘Kinotop’ target audience. In terms of sex ration for particular age group, it is estimated to be 1. 03 male(s) to female and makes male population the majority in the country according to Central Intelligence Agency Fact Book.

Dell: Overview of the company Dell, a multinational American company, is one of the world’s leading PC manufacturers, recently positioned on the second place after fellow American competitor Hewlett-Packard (HP). According to figures from iSuppli market research, worldwide PC shipments totalled 88. 1 million units during the first quarter of 2009 . PC shipments in the UK totalled 2. 9 million units in the second quarter of 2010, and has been showing growth of 15. 1% since. European PC market has experienced a major slowdown in 2009 due to the general economic situation, which particularly affected Western European countries with shipments 2 0% lower than expected. Today, Dell is focused on getting out of the recession by bringing out a new generation technology. As a part of this, ‘Kinotop’ – a kinetic energy self charging laptop aimed at professionals aged 35-50 in the UK is being launched into the market. ‘Kinotop’ is the result of the latest market research and has been specially designed for the purpose of energy saving power for environmentally conscious working adults, being both environmentally friendly and energy budget saving. Market research Consumer PC development and manufacturing is one of the fastest growing and innovative global industries.

In 2006 the UK market has been valued of total ? 953 million. According to Government Statistics (www. statistcis. gov. uk) , 56% of households in the UK had a desktop computer, and 30% had a portable computer in 2006 and this figure has grown year by year. Today, laptops are still the largest segment of the consumer laptop and PDA market although challenged by PDA phones, ‘on- the-go’ computing devices. Following current social and economic trends, ‘Kinotop’ laptop is to raise product brand awareness amongst the target group – middle-income professionals and high-income professionals who have been affected by recent economic downfall.

Research conducted by Ernst & Young has shown that UK consumer spending power has drastically decreased by 15% due to a large rise in the cost of living in the past five years and that monthly discretionary income for a typical household was now ? 772. 79 – compared with ? 909. 84 in 2003/04. The Annual Discretionary Study shows that a typical British family had less than 20% of its gross income remaining compared with 28% in 2003 and therefore less disposable income.

British Lifestyles 2009 stated that the recession, which has impacted consumer market, would continue to have its effects up till 2014. Jason Gordon, director of retail at Ernst & Young explains that ‘the significant decline in discretionary income means consumers are no longer in a position to spend as freely as they have done in the past. ” Other studies by Ernst & Young have concluded that an average monthly energy bills have risen by 110% since 2003/04 and now are on average ? 95. 80.

These factors have created a market gap and introduced an increasing need for affordable and quality laptops which would help the UK costumer save their money on a regular basis long –term. Dell is aiming to out space current global leader in blend utility computer manufacturing Hewlett-Packard by the end of 2011 and one of the means to achieve this objective lays in the introduction of innovative technologies which offer an environmentally friendly cost cutting alternative ‘for those who care’. ‘Kinetop’ will cost an average ? 00 business laptop and will be aimed at middle-income level engineering and graphic design 3 orientated professionals. Consumer Marketing Engagement Strategy 1. 2 Perceptions If considering the consumers Perceptual Mapping of laptops, in the UK market generally held views differentiate entirely: • It used to be extremely popular to have the biggest screen and the fastest processor, nowadays, however, research shows that it is essential that laptop is extremely well tailored for costumer’s personal needs.

Laptops are no longer treated as a luxury good and are holding a position of an increasing necessity amongst the user groups. Increasing number of companies are shifting their employees from desktop to laptop computers and, as Forbes states, while under-30 workers, who grew up texting rather than with e-mail, • 4 • find laptops equivalent to a small unpractical suitcase and are shifting towards PDAs such as Blackberry and Iphone, their older colleagues find it difficult to adapt to portable computers and still consider a PC to be a device that should not be carried around.

Research shows that costumers aged 35-50 are far less confident about moving to smaller devices as it opens up new security risks to their personal and business files. In order to achieve more positive perception in this particular group ‘Kinotop’ must be positioned as a trustful quality Dell product, reliable in terms of power, an environmentally friendly option, which shows direct benefits to a user by cutting their energy use on a regular basis. •

Research also shows that current laptop users aged between 35-50 and are • working in such high computer power consuming fields like engineering or graphic design have already recognised the need and expressed interest for an ‘energy saving and cost cutting’ product availability. This came as the result of continuously growing environmental awareness amongst particular age group and recent effects recession had on their income. Expected price for a business laptop is on average ? 600. At around • ? 00, ‘Kinotop’ will be an affordable product, which encourages costumer purchase by low pricing for high quality. Laptop purchase amongst the target audience is still considered to be a • specifically planned type of decision-making affected by situational factors such as social surroundings (in this case increased awareness of potential environmental damages) and temporal perspective (lower disposable income and search for cost cutting solutions). The diagram below shows where Dell ‘Kinotop’ would be on a target consumer perceptual map. 5

The above perceptual map shows where various PC manufacturers targeting business-orientated adults between the ages of 35 to 50 approximately are and where Dell ‘Kinotop’ will lie in the future. 1. 3 Attitudes ‘Kinotop’ will face a technological barrier when it comes to targeting people above the age of 35 to 50. Generally, costumers form certain attitude towards laptop computers according to past experiences they had whilst using it and also related information they gained from various sources, such as opinion leaders at workplace, which is otherwise called cognitive learning.

However, particular target audience will need help in forming 6 an attitude towards ‘Kinotop’. This is because older generations have not been raised in close contact with Informational Technologies and lack personal experiences in the field and therefore need to be educated about innovative product benefits by opinion leaders in order to make a purchasing decision. Solomon argues that an attitude can form in several different ways; one of them is observational learning through peer behaviour and the media.

Commonly, older target consumer has sceptical views on a change from stationary PC’s to portable laptops in fear of losing powerful software compatible to their needs. ‘Kinotop’ is designed to alter their attitudes towards this ‘change’ from seeing it as ‘unnecessary and complicated hustle’ into a rewarding and cost effective process, which enhances quality of their work and is also financially and emotionally rewarding. For professionals this might be another alternative way of ‘giving something back to the environment;’ opposed to other traditional methods of social responsibility. . 4 Motivation Solomon (1999) explains that meanwhile shopping can be seen as an activity to gather needed goods, there are a number of social motives (perceptions and attitudes as discussed above) behind it. Solomon et. al (2010) further define motivation as ‘the process that cause people to behave as they do. ’ This makes motivation a pathway to every purchase decision that consumer makes. Kinotop’s target audience might not necessarily feel the immediate need to switch to the new product due to initial buying cost of ? 00. However they can be motivated to cut down their monthly electricity bills and therefore will find ‘Kinotop’ as one of the longterm solutions to existing problem. Business users aged between 35-50 may be sceptical about self-charging technology based 7 on kinetic energy due to the product’s innovativeness and therefore lack of costumer feedback on the object. On the other hand, they understand an ever-growing need of reorientation to environmentally friendly goods and might feel pressured to switch as soon as possible.

This type of motivational conflicts is described in the Approach-Avoidance Conflict theory and further explained by Solomon et. al (2010): ‘We desire a goal but wish to avoid it at the same time. ’ In order for a target costumer to overcome such conflict when he/she faces a purchase decision, the positive attributes must be highlighted. In the case of Kinotop, this means that product’s environmentally friendly technology must be highlighted and target costumers must be sure they will not face a low-quality unreliable product.

As motivations are mainly driven by needs (acquired needs, in this case), financial benefits of this product must also be clarified to the consumer. ‘Kinotop’ motivates it target costumers to be environmentally and financially conscious without requiring any additional engagements rather then the procession of a product. 1. 5 Decision Making Researchers suggest that consumers pass five stages in decision making process in any purchase, fulfilling both Innate and Acquired needs. It concentrates marketer on the whole’ buying experience’ to a certain extent rather then just the ‘buying decision’ itself.

These stages are as following Need Recognition, Information Search, Evaluation of Alternatives, Purchase and Post-Purchase Behaviour Evaluation. The diagram below is commonly used to summarise the ‘5 steps of buying’ process. 8 In case of Kinotop, target consumer will raise some deliberation to this purchasing decision prior to information search because buying a laptop itself does not fall under ‘Impulsive decisions’. This means gaining understanding of the importance of environmentally friendly technological goods and/or a decision to cut down monthly electricity cost at no extra effort.

Problem awareness regarding these issues can be raised by Dell’s marketing strategies around Kinotop. After identifying personal needs, the consumer needs to decide on how much information he/she requires to absorb (research product specifications online or talk to a store representative acquiring an opinion former). In the beginning of product’s launch, Kinotop will be the only brand of self-charging laptops, which disables consumer to evaluate alternative possibilities. This will push away a certain number of possible buyers who will be pulled away by still non-existing product feedback.

The diagram below shows a decision making process that a target consumer would follow in making a decision to buy Kinotop. 9 At the end of decision-making process, a consumer will purchase the product and enjoy the benefits it brings. Target consumer will feel rewarding experience that he/she will be recognised as ‘environmentally responsible’ and also cut down monthly electric expenses without sacrificing the quality of work he/she is producing. 10 2. Target Segment Multimedia Strategy

Consumption behaviour of business orientated middle-income consumers is highly affected by external influences, I. e. ‘shop to belong to a colleague or friend groups’. However this target audience can also be highly affected by such personal factors as ‘shop to belong’, ‘shop to re-define oneself’ or as a form of self-expression. External influences on purchasing behaviour for this product include such aspects as Culture, Income level and Social Responsibility Awareness. CULTURE Solomon et al. (2010) defines culture as ‘a concept crucial to understanding of consumer 11 ehaviour, may be thought of as the collective memory of a society… it includes both abstract ideas, such as values and ethics, and the material objects and services, such as cars, clothing, food, art and sports, that are produced or valued by a group of people. ’ British culture is one of the most diverse and liberal cultures in the world. It is also focused on individualism and emphasizes personal achievement and differentiation rather than collectivist goals. All consumer aspects of British culture are focused on deeply embedded individualism and its importance.

Each person is encouraged to stand out in any way and impress others, while relying only on him or herself. In recent years, British population has been strongly encouraged to switch to eco-friendly product types. Social responsibility awareness is considered to be reasonably high amongst mid and high-income business people. It is also becoming increasingly popular to be perceived as a person who is educated on this topic and is involved in the process. Dell has created a product, which is not only an affordable and easy way to cut down personal spending on electricity, but also meets a new ever-growing need for ‘green’ products.

This allows consumers to satisfy both types of factors – external and internal, by purchasing one product – Kinotop. INCOME LEVEL Income levels directly influence consumers’ ability to afford goods. An estimated average salary for engineering related job in the UK is ? 32,000, while an average priced business purpose laptop is around ? 600 per unit. It is reasonable to believe that Kinotop’s stimulating ? 500 price will not only be considered as an affordable product but also will raise sales volumes by appealing price-wise to wider audience. SOCIAL RESPONSIBILITY AWARENESS

In comparison to other European markets, the UK has a high level of general social responsibility and environmental issues awareness. This is constantly reminded to general public via broadcast, print and online media. Most of big companies are already practising 12 some form of CSR and are constantly educating their employees about its importance. As Kinotop’s main target audience are business oriented people aged 35-50, specially those involved in engineering sector, it is fair to assume that most of them will have some degree of awareness on the issue and already be involved in CSR activities.

KINOTOP MARKETING ACTIVITES TV The most intensive influences on business orientated adults aged 35-50 in the UK are media channels by which information reaches them. This defines television as one of the most effective and wide reach communication channels. Second most affective channel is business related publications (such as weekly/monthly magazines, i. e ShortList), which are widely available for purchase or distributed for free). According to Ofcom research conducted in August 2010 consumers spend almost half (45%) of their waking hours watching TV which sums up to an average of 3 hours 45 13 inutes exposure to TV daily. Even though the popularity of mobile phones and other multimedia devices is constantly growing, half of consumers still consume only one type on media in the evening. However, this report also states that traditional media is far from dead. The best time to air advertisements is in peak-time, starting from 5PM and finishing around 10PM, specifically intensive in the time for evening news. This is the time when consumers typically come home from work and spend time relaxing and watching TV.

Television advertising can also be beneficial in terms of product specifications and can educate consumers of how Kinotop can and should be used. Kinotop will be used with its slogan ‘Kinotop – care, work, save’ which is demonstrated below. The slogan will be present on every Kinotop appearance. Original Dell Logo colours were used for creating logo’s ‘trial’ version, which has been negatively perceived by conducted focus groups even though it used Dell’s corporate colours. Therefore it has been altered to communicate its original ideas through colours associations.

Green colour is internationally perceived as environmental colour and is amplifying main colour of the nature. There can be no cultural misunderstandings about it, in case Dell Kinotop decides to expand outside the UK market. It has been decided to stick to circular Dell logo in the background, as it has proved to be the most recognisable attribution and incorporate Kinotop name in it. 1. Initial version 14 Logo on its own would not represent any particular visual interpretations, as shown below. 2. Final version 15 MAGAZINES

In order to provide supporting media channels to promote Kinotop laptop it has been decided that Kinotop needs to be advertised and featured in Business weekly/monthly magazines and free of charge wide reach publications (such as ShortList) therefore maximise the information reach. This creates an opportunity for consumers to get additional information on what product has to offer and why is it worth buying. Certain PR techniques should be applied for this information channel in order to appear in articles and reviews in order to build trustful bond between consumer and the product.

The example of Kinotop’s media exposure in ShortList magazine is shown below. 16 REFERENCES: 17 Dell Retains Second Spot in Recovering PR Market [Online] Available at http://www. eweekeurope. co. uk/news/dell-retains-second-spot-inrecovering-pc-market-15409 [Accessed on 9 December 2010] Dells new laptop [Online] Available at http://www. forbes. com/forbes/2009/1005/outfront-technologycomputers-dell-new-laptop. html [Accessed on 25 November 2010] The PC era is over again [Online] Available at http://blogs. forbes. om/edsperling/2010/12/13/the-pc-era-is-overagain {Accessed 13 December 2010] Computer software (Database). November 2010 Available at http://oxygen. mintel. com [Accessed 1 December 2010] Central Intelligence Agency Fact Book [Online] Available at https://www. cia. gov/library/publications/the-world-factbook/index. htm [Accessed 28 November 2010] EBSCOhost [Database]. July 2010 Available at http://web. ebscohost. com. ezproxy. wales. ac. uk [Accessed 1 December 2010] Office for National Statistics [Online’ Available at www. ns. gov. uk [Accessed on 11 December 2010] Individual Critical Reflection on Consumer 18 Behaviour Studies with Specific Focus on Module Learning Outcomes. As part of my Undergraduate Degree in Public Relations, one of the modules I took was the Insight into Consumer Behaviour. However, I never got the chance to enjoy the subject and dive into it in the whole depth and width of it as I had wanted. I prepared for the exam and also submitted a Consumer Behaviour research report on ‘Gift giving habits in the UK’.

Maybe it was the chosen subject that did not appeal to me then. I graduated and soon forgot all that I’ve learned. Too soon after graduating and taking up a placement as a Marketing Intern I have faced how crucial was the theoretical knowledge in Consumer Behaviour research. Not only it took me longer to conduct the necessary research, but I didn’t have a clue what trends or models should I use in real life business. These are just a couple of reasons why I have been particularly excited to re-take this module and fill in those major gaps in knowledge.

At first, I found it very interesting but extremely hard to follow critical discussions in class, as all my classmates seemed like they had in-depth understanding of the subject which I lacked. I also work part-time, which left me with no extra time on my hands to go beyond core readings and case studies which we discussed in class hours and qualitatively catch up. However, I started paying more attention to everyday examples of Consumer Behaviour research and theories whilst reading a newspaper or watching the TV program.

As soon as I felt comfortable enough with my knowledge, I started expressing my observations during critical discussions in class and in terms of theoretical knowledge that is where I gained a base. As the time passed, I realised I should have started following those principals since day one, not mid-way through the program. It came as a surprise realisation to me, but it wasn’t until I have started collecting data for my assignment, that I have started to really be able to critically appreciate the value of the module. In a way, I am glad that I am left with a degree of doubt about the validity of certain models, i. Consumer Decision Making Process. It is described as a 5 step process in most textbooks. I believe this model still applies to numerous cases; however, nowadays consumer environment is changing on everyday basis, so previously adopted models have to get tailored and updated every few years. 19 The process of in-depth learning was mentally challenging and time-consuming and required involvement with textbooks, e-journals and databases, but it was also very rewarding and I believe I have succeed in what I set out to do.

Great diversity of our class was also enormously helpful in understanding different cultures and behaviours, particularly in transferring my theoretical knowledge to real life practical examples and post evaluating core mistakes during my internship. It is a very strong aspect of this module. To sum up this paper, I believe in the importance of understanding consumers and their psychological attributes. I am finally able to ‘understand the importance of understanding’ and I think it is a great motivation to keep discovering areas of interest inside the Consumer Behaviour research. 20

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